Foreign Direct Investment is extremely important to all countries in numerous ways. Traditionally FDI targets more developed countries when looking for hostess to invest, but nowadays there has been FDI growing in developing markets.
It is obvious that the attraction of FDI can be considered as a key element in a country’s growth and economy. This might be the reason why it isbecoming very important throughout the world since there is a lot of competition between countries.
If we talk about FDI in Spain, there is a government agency there called, INVEST IN SPAIN. INVEST IN SPAIN is dedicated to promote foreign investment and to attract investors. It is principally the reference point for foreign investors and the point where contracts are made for the state, regionand local companies or institutions that are dedicated to attract investment.
The foreign companies that have invested in Spain have been very essential to the country’s development, since they haven’t only generated wealth through investments and creating jobs, they have also helped with the technology and the knowledge that have contributed to the industrial part of the country.
Spain hasvarious factors that can be attractive for foreign investors. It has a comfortable business environment; it also has one of the best infrastructures in Europe. The labor force in Spain is also a good quality; they have a dynamic domestic market and a lot of consumerism, which makes the purchasing power really high. If we talk about Spanish economy we can say that it is another factor that may attractFDI very easy. Spain has placed itself as one of the best economies and it has a privileged access to different markets considering some countries in Latin America given the similarities in culture and language.
FDI flows to this country grew notably during the 80’s. This was a response of the entry into the European Economic Community. The advantages were the low labor costs, the size of themarket and its potential growth. All of these factors were incentives to those who were looking to produce or sell in national or international markets.
On a study that was realized they found that Spain occupies the 7th place among other countries that were studied that receives the most FDI. If we talk about numbers, Spain receives an average of $46, 000 million a year.
It was also said thatover a million workers are employed by foreign companies, and they make up about 20% of the country’s industrial activity.
If we focus in the FDI that is received by Spain, we can see that it is really high compared to other countries. This might be a good sign of good competitiveness and stability and good economic leadership.
The Spanish Government has been pursuing policies that try to makeSpain look more attractive to investors; they are trying to create a welcoming environment to foreign investors.
A factor that has stimulated a high inflow of FDI into Spain is Spain’s accession to the European Community and the Government’s program to transfer the state enterprises assets to the private sector. The reason of this is that foreign investors quickly took advantage of the low-costenvironment and buying Spanish industries. Between 1996 and 2001 Spain received almost $101 billion dollars of FDI. The main investors in Spain are Germany, France, the United Kingdom and the Netherlands.
In recent years, the main target of FDI investment has been the services sector. Transport, communications and the financial sub-sectors received almost 82% of total FDI between 1997 and2000. The other amount of FDI was directed to the industrial sectors. The main targets of FDI in the industrial sector are the automotive industries, chemical industries and food and beverages industries. Electronic and pharmacies were also a part of this.
In 2008 the flows showed that the most important sectors of FDI in Spain were the Trade and Commerce group, it was followed by Production and...